1 Joe Valente Director of Research and Development "Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital."

2 “Indexing” ABCN May 2005

3 …He who lives by the crystal ball soon learns to eat glass…

4  The Role of Property Unit of production Source of cost Potential value Real Estate in the 21 st Century

5 24/ TV channels Shopping trips to New York The internet £5 flights Banks without branches SAC Offshoring Brand literacy at 2.5 yrs Virgin pensions

6 Big is beautiful Size, mass and brawn Commanding presence Standardisation Office cost & productivity Hierarchical management

7 Routes to Profit: More of the same Be more efficient Cut costs Innovate

8 Human capital rather than real estate lies at the centre of the value chain Speed to market attracts a premium Real estate as a service How much space… …where…for how long…

9 A question of definition Asset value of £3.75 bn Rapid growth Regional disparities …Apparently not all publicity is good publicity !! The nature of competition The UK Market 10 Business Centres 8 Workspace 2 Mainstream Office The UK Market

10 Real Net Effective Rents Lease Lengths Mainstream Office Market Eroding value of cost and flexibility proposition

11 Key Trends: Corporate change favours flexible space provision …But its not a universal panacea Increased M&A activity Clear market proposition Emergence of brands Structural change… …investment asset class

12 Property Brands: Where’s brand value in property? Trust Consistency Quality Risk management Market premium Emergence of strong covenants

13 Investment Stock Strong appetite for real estate Wide range of investors active in the market Location, location, location? Legislative change

14 US REITs by Real Estate Sector UK is the only G8 economy that does not have a “Reit” type vehicle Consultation period Announcement expected in Finance Act, April 2006 Allowed to invest in all property types Source of capital or investment product? Definition of investment grade stock is/will change

15 Liquidity: Improved liquidity across whole range of specialist sectors Income generation is the key Diversification Exit route Self storage Nursing homes Student accommodation Hotels Lodges Leisure Health care

16 Exit Strategy: Institutional holdings LPs Bank debt Corporate portfolios Public sector Business centres? Public sector LPs Buy to let Institutions £10bn £17bn £38bn £90bn £110bn £135bn Corporates Private debt Business Centres £4bn

17 Transparency: Benchmarking Value of data Credibility/trust Robustness

18 Towards an Index: UK survey KISS Going global

19 Summary: 1.Investor attitudes are changing …definition of investment stock has and will continue to change 2.“why invest?” … the business case needs to be made 3.Clear market proposition and greater transparency…It is not an optional extra ! 4.Brand value…premium

20 Questions?